The Tiwai Point Aluminium Smelter will reportedly cut its production for reducing electricity usage by about 11 megawatts, as it has been receiving warnings over the continuing power market squeeze.

This electricity cut is on top of the earlier 6 megawatts, reducing Tiwai’s energy consumption to 55MW. It is the latest smelter in a line of industrial power users that have curbed production to reduce electricity usage in response to unfolding power crises triggered by low rainfall, gas production problems, and a long period of relatively low investment in new power generation.

John Harbord, chairman of the Major Electricity Users Group, said that businesses that were contemplating to re-hedge electricity in the second half of the year faced a hedge price hike by up to 100 per cent compared to the year last.

He said, “Some energy-intensive companies simply cannot afford hedge prices that high. Further job losses are likely, with our regional communities likely to be the hardest hit.”

The Tiwai Point Aluminium Smelter reached an agreement with the power company last week. The agreement outlined framework for the smelter to make small, voluntary cuts of up to 30.5MW.

A spokeswoman of Rio Tinto, Tiwai’s majority owner, said the 11MW cut this week could be achieved by closing some of the smelter’s pots but would not result in job losses.